It is originally cut out of a log as 2" by 4". Much of the size reduction happens in drying the wood. The rest is planed down to make it smoother and to get it to a consistent size. Why it's 1 1/2" by 3 1/2" specifically, I don't know.

Nails are measured that way supposedly because of how much they orginally cost. There are a number of theories, but they are all quite similar. One is that it cost 10 pennies (which was abbreviated at the time as `d' for `denarius') for a hundred, or 10d for a thousand, or a pound.

Speaking of British pennies, when did they stop being abbreviated as `d'? When you guys went from your old monetary system to the new decimal system (that was about 1965, right?)? Or was it further back than that?